Music licensing negotiations between TikTok and Universal Music Group are heating up, with negotiations leaving the boardroom and entering the public sphere.
TikTok began removing music from UMG artists such as Taylor Swift and Niall Horan on Thursday. The company has muted existing TikTok videos featuring UMG-licensed songs.
UMG, the label behind many major artists, released an “open letter” on Tuesday alleging various complaints against TikTok. It accused the app of being “flooded with AI-generated recordings,” allowing “a wave of hate speech, bigotry, bullying and harassment,” and “selectively removing music from certain artists in development.” .
A TikTok spokesperson fired back in a statement to Business Insider, explaining that the letter presents “false narratives and rhetoric,” and that UMG “is a platform with well over 1 billion users. “I have chosen to distance myself from such support.” It is a way to promote and discover their talent for free. ”
One of the most important points of UMG’s letter focused on how generative artificial intelligence could impact artists. The company has no intention of moving forward with an agreement that doesn’t address the impact of AI on music, according to people familiar with the negotiations. Last year, AI also became a sticking point in negotiations between Hollywood studios and screenwriters and actors.
But ultimately, corporate jabs aside, this fight is about money.
UMG and its peers want TikTok and its parent company ByteDance to pay more in music licensing fees. TikTok has become an increasingly important platform for music rights holders as it seeks to build a business on music streaming, garnering hours of daily attention from millions of fans. TikTok signed a licensing agreement with Warner Music Group in July, and announced a deal with Sony Music Entertainment in November 2020.
“Their core mission is to generate as much money as possible from records for shareholders,” David Herlihy, a copyright attorney and music industry professor at Northeastern University, told BI.
Whether TikTok is able to resolve its dispute with UMG is extremely important to the company. Music is at the core of the app, which became popular after it was integrated with lip-syncing platform Musical.ly in 2018. The company is in the process of launching a dedicated streaming app, TikTok Music, and has been working closely with artists on influencer listening parties, livestreams, in-person events, and more. The loss of UMG’s catalog and artist support would hinder the momentum of many projects in the music field.
The companies’ licensing agreement expired on Wednesday, the same day that TikTok’s CEO testified before Congress and ByteDance scrapped its music streaming app Resso after it hit government roadblocks in India.
Two music giants face off
TikTok vs. UMG isn’t a David vs. Goliath battle, it’s a Goliath vs. Goliath cage fight.
According to Billboard, UMG is the world’s largest record label by market share. TikTok has become the most important social platform for music discovery.
The two companies have battled over licensing in the past and maintain a complicated relationship as they seek to protect revenue while collaborating on marketing and content.
“Every time these negotiations happen, it comes down to which side needs the other person more,” Tatiana Sirisano, senior music industry analyst and consultant at MIDiA Research, told BI. Ta. “Social platforms will argue that social platforms are essential marketing tools for labels that they can’t afford to lose, and labels will argue that the platforms don’t work without music. With the latest news, UMG hopes to prove the latter. It seems like it is.”
Withholding music is not an uncommon tactic in licensing negotiations. In 2008, Warner Music Group removed its music from YouTube during payment negotiations. Sony Music Entertainment removed its song catalog from ByteDance’s Resso in late 2022. Then, in early 2023, TikTok tested removing access to major label music for some users in Australia.
But as a global social giant, TikTok is an important product for music artists and labels. UMG’s catalog has now been removed from the app, but it’s unlikely to be gone for long, music industry experts told BI.
In its letter, UMG asked for a “time-out” from TikTok rather than a divorce.
“Sometimes you have to take drastic measures to get someone back to the negotiating table, and that’s exactly how I feel,” says co-founder of independent label +1 Records. Johnny Cupps, CEO and CEO, told BI. “TikTok can move forward without Universal more than Universal can move forward long term without TikTok.”
Still, UMG and its publishing group work with some of the most important artists on TikTok, including four of the top five most popular artists on the app in the U.S. in 2023.
And with Instagram Reels and YouTube Shorts emerging as viable alternatives, TikTok is no longer the only player when it comes to short video music marketing.
TikTok’s growing influence in music
Over the past few years, TikTok has built a business around music.
TikTok in December sold out music event Introducing performers who have made a name for themselves through the app. The company also artist services Through our SoundOn division and partners SiriusXM on the “TikTok Radio” station.
Some industry insiders wonder if the company’s foray into artist services is encroaching on record label territory.
“It’s clear to me that TikTok is no longer just a marketing venue,” said MIDIA’s Sirisano. “The platform is becoming a form of consumption in its own right, especially for younger generations. This is why the music industry is trying to capture more value.”
This story has been updated with new information.